Department of "Huh?!": Greg Mankiw Edition
Greg Mankiw writes:
From 6 Economists, 6 Ways to Face 2012: [W]hat does the Fed need to see before it starts raising rates again? Unfortunately, economists don’t offer simple and unequivocal advice. Some suggest watching the overall inflation rate. Others say to watch inflation, but to exclude volatile food and energy prices. And still others advise targeting nominal gross domestic product, which weights inflation and economic growth equally.
Forging a consensus among members of Federal Open Market Committee, which sets monetary policy, won’t be easy. In fact, it may well be impossible. But the more clarity the Fed offers about its contingency plans, the better off we’ll all be in the years ahead.
I don't know of anybody serious who advocates raising interest rates when headline inflation rises if core inflation is currently and is expected to remain low.
Does anybody know of anybody serious who advocates raising interest rates when core inflation is currently and is expected to remain low.
